Note: I wrote the following after watching the
Prez on TV. His smiling demeanor and tough guy talk led me to
believe that a “patch” on the cliff might happen. Four hours
later, and that is not the case. The House will not vote on
anything today.

There is a chance that the House could vote tomorrow. This would
bring results along the lines I describe below. But if the House
does not vote, then it means there will be a long fight. A fight
that could go on until the debt limit shuts the government.

These people are desperately trying to fail.

My read of the President’s speech is that there is a deal that
will avoid the cliff. So go enjoy New Year’s Eve. Give it another
30 days, and we’ll be right back into the soup. My scorecard on
the deal.

-If you’re unemployed, you’re a winner.
You get another extension of benefits.

-If you’re employed, you’re a loser. Fully 155m
workers are going to pay 2% more on income starting tomorrow. The
increase in FICA taxes will come to a lumpy $120B. This will rank
as one of the largest YoY tax increases in history. This is a
very regressive tax increase. There is a $108K cap on what is
subject to FICA taxes, so high incomes do not feel the bite. But
those who earn an average income will see a meaningful reduction
in disposable income ($2,000 per household).

This is a decidedly un-Democratic outcome. The rich avoid taxes,
lower incomes pays a disproportionate share. Who insisted that
this unfair outcome was part of the deal?
Answer: Harry Reid, Nancy
Pelosi and Barack Obama. Don’t blame the Republicans when
your next check has an extra bite out of it. “Go
figure?”, on this outcome.

-If you make between $250 and $400k, you are a very big winner,
congratulations. Half of the top 2% just got a free pass.

-If you make over $450k, the cliff deal says you may have to pay
more taxes. I wouldn’t worry too much about the top 1% – that
group has 18% of all income. The move from 35 to 39.6% for
America’s richest will not matter a bit. None of them paid the
old rate, they won’t pay the new higher rate either.

-If you’re one of the 33 million taxpayers who avoided falling
prey to the Alternative Minimum Tax (AMT) by the last minute
patch, you dodged a
bullet. This would have taken an average of $4k out of
your pocket. I’m happy for you.

-If you’re one of the 4 million hopeless losers who have been
stuck with AMT in prior years, you’re going to get stuck again.
I’m one of those poor souls who is mired in this tax trap. It’s a
very unfair outcome for me. I make a fraction of the top 1%, but
because of AMT, I pay a minimum federal tax of 28% while the top
1% pays an average of only 15%. Where’s the damn
cyanide?

-The defense industry will have the bubbly out tonight, no
sequestration for them for the time being. Phew! I was really
sweating this one!

-Investors will also have the Champagne out. They dodged a bullet
– at least for the next 60 days…..Keeping the 15% Cap Gains rate
for most incomes is a plus, the new 20% rate for the top filers
is a gift.

-The American people are very big losers. The
cliff deal just sets up another crises before the snow melts.
Nothing has been accomplished that addresses the uncertainty
factor. The deal insures a big deficit for 2013. It will not
increase tax revenue from the top 1%. It will result in a big
increase in payroll taxes that will hurt the bottom 40%.

-Washington is the biggest loser of all. Democrats, Republicans,
Senate, House and Obama all come off looking like chumps. They
didn’t deliver anything but a Band Aid. I give the cliff deal a
D-.